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Reynolds American, the US cigarette manufacturer, has made its largest acquisition since it was formed from a merger two years ago with the $3.5bn (â¬2.8bn) purchase of Conwood, the smokeless tobacco products firm owned by the billionaire Pritzker family.

In the current Conwood transaction, Reynolds American is being advised by Lehman Brothers. The company will fund the acquisition with $3.2bn in new debt, financed by Lehman and JP Morgan, and $300m in cash.

Susan Ivey, chairman and chief executive officer of Reynolds American, said in a statement: "Conwood provides us with a significant, strategic platform within the growing moist snuff category that would have taken years to build. The moist snuff category has been growing at 4% to 5% for the past five years".

Conwood is owned by business interests of the Pritzker family, which also owns the Hyatt hotel group. The company traces its roots back to the 1782 founding of the Garrett Snuff Company, operates seven facilities and employs about 900 people in Tennessee, Kentucky and North Carolina.

Cigarettes account for about 90% of US tobacco market of $80bn and $85bn. Non-cigarette tobacco products account for about $6.6bn.